Interesting Deal...What to offer?

[Greg Scully]

So there's a 10plex that is 30% occupied and in need of extensive work.  The owner wants 450k with only 65K down.  There are estimates that the scope of work will be around 100k.  A local bank is willing to finance the rehab for a 1st lien and the owner will deffer payments until the rehab is done and the property is cash flowing.  The remaining 385k will be at 6% over 25 with a 10yr balloon.  I would imagine that I would refi out long before then.  

I am having trouble figuring out how to approach this.  If you base price on actual income this place is essentially worth the ground  it's on.  The city appraisal is around 360k.  

I am new to all of this, so this is not very straightforward for me.  Any insight on how to approach this would be appreciated.

They are all 1br, 1ba in a C type neighborhood that is going through some renewal.